Speculators pare U.S. 10-year T-note net shorts before Fed minutes

(Reuters) – Speculators’ net bearish bets on U.S. 10-year Treasury note futures fell a tad earlier this week before Federal Reserve’s release of minutes from its policy meeting last month, according to Commodity Futures Trading Commission data released on Friday.

The Treasuries market had stabilized earlier this week from heavy losses in the previous two weeks due to jitters about rising inflation and a faster pace of interest rate increases from the Federal Reserve.

The Fed’s record of its Sept. 25-26 meeting suggested a few policymakers are open to raising short-term interest rates above a “neutral” level as the economy has been growing faster than their forecast.

The latest minutes sparked a dramatic selloff in the money markets that caused a sharp spike in key short-term rates on Thursday. Bond yields however were buffered by safe-haven demand from losses on Wall Street.

The amount of speculators’ bearish, or short, positions in 10-year Treasury futures exceeded bullish, or long, positions by 615,970 contracts on Oct. 16, according to the CFTC’s latest Commitments of Traders data.

A week earlier, speculators held 622,422 net short positions in 10-year T-note futures.

In addition to the FOMC minutes, big swings in global equity prices and worries about Italy’s budget, Brexit negotiations and strained relations between United States and Saudi Arabia have stoked volatility in the bond market the latter part of this week, analysts said.

On Friday, benchmark 10-year Treasury yield ended up 2 basis points at 3.196 percent, holding below the 7-1/2 year high of 3.261 percent reached last week.